Rockefeller grants $500K to Hub social enterprise

The Rockefeller Foundation has given a $500,000, two-year grant to Boston-based Social Finance Inc., to help develop a national social impact bond market.

Social Finance was founded in January 2011 to develop, finance, launch, and manage social impact bonds in the United States. A social impact bond is a financial instrument that aligns private investors, entrepreneurial nonprofits, and governments to impact poor and vulnerable communities. Investors provide capital to nonprofit organizations to create high-impact programs and reduce governmental expenditure.

If an independent evaluation determines that the improved outcomes have been achieved, the government repays investors their principal and a rate of return. Otherwise, investors lose their capital.

In May, Massachusetts became the first state to explore this new financing tool, according to a news release published at the time by the state Executive Office of Administration and Finance.